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How do Land Markets Anticipate Regulatory Change? Evidence from Canadian Conservation Policy

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  • Branko Boskovic
  • Linda Nøstbakken

Abstract

Regulation often evolves, and affected consumers or firms may adjust their behavior in anticipation of potential changes to regulation. Using shifting land use regulation boundaries and oil lease prices from Canada, we estimate the effect of anticipated regulatory change on the value of land. We find that anticipated rezoning decreases the price of unregulated leases. Based on our estimates, not accounting for anticipation underestimates the total cost of the regulation by nearly one-third. Overall, the evidence suggests that anticipation effects are significant and that the cost of anticipated regulation is capitalized into land values.

Suggested Citation

  • Branko Boskovic & Linda Nøstbakken, 2016. "How do Land Markets Anticipate Regulatory Change? Evidence from Canadian Conservation Policy," CESifo Working Paper Series 5956, CESifo.
    • Handle: RePEc:ces:ceswps:_5956
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    References listed on IDEAS

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    More about this item

    Keywords

    regulation; anticipation; land values; zoning; oil leases; endangered species;
    All these keywords.

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q30 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - General

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